Head to Head Contrast: Allison Transmission (NYSE:ALSN) & IHI (OTCMKTS:IHICY)

IHI (OTCMKTS:IHICY) and Allison Transmission (NYSE:ALSN) are both industrials companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, dividends, risk, institutional ownership, valuation, profitability and analyst recommendations.

Dividends

IHI pays an annual dividend of $0.07 per share and has a dividend yield of 0.4%. Allison Transmission pays an annual dividend of $1.16 per share and has a dividend yield of 1.0%. IHI pays out 6.8% of its earnings in the form of a dividend. Allison Transmission pays out 18.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Allison Transmission has raised its dividend for 2 consecutive years. Allison Transmission is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

IHI has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, Allison Transmission has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500.

Valuation and Earnings

This table compares IHI and Allison Transmission”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
IHI	$10.92 billion	1.80	$1.06 billion	$1.03	17.57
Allison Transmission	$3.01 billion	3.21	$623.00 million	$6.29	18.62

IHI has higher revenue and earnings than Allison Transmission. IHI is trading at a lower price-to-earnings ratio than Allison Transmission, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares IHI and Allison Transmission’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
IHI	N/A	N/A	N/A
Allison Transmission	12.02%	38.18%	9.99%

Analyst Recommendations

This is a summary of recent ratings and price targets for IHI and Allison Transmission, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
IHI	0	2	0	0	2.00
Allison Transmission	0	5	2	1	2.50

Allison Transmission has a consensus price target of $131.17, suggesting a potential upside of 11.98%. Given Allison Transmission’s stronger consensus rating and higher probable upside, analysts plainly believe Allison Transmission is more favorable than IHI.

Institutional and Insider Ownership

96.9% of Allison Transmission shares are owned by institutional investors. 1.1% of Allison Transmission shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Allison Transmission beats IHI on 15 of the 18 factors compared between the two stocks.

About IHI

IHI Corporation designs and builds engineering solutions in Japan and internationally. The company operates through four segments: Resources, Energy and Environment; Social Infrastructure; Industrial Systems and General-Purpose Machinery; and Aero Engine, Space and Defense. The company engages in the manufacturing, sale, and provision of services related to power systems plants for land use and power systems for chips; carbon solutions comprising boilers and storage facilities; components for nuclear power plants; bridges and water gates, transport systems, shield systems, and concrete construction materials; vehicular turbochargers, parking, heat treatment and surface engineering; transport machineries; logistics and industrial systems; and rotating machineries comprising compressors, separation systems, and turbochargers for ships. It also offers 3D laser radars, X-ray inspection systems, monitoring equipment, oil leak monitors, vibration control systems and seismic isolation floor systems, and disaster prevention equipment; environmental monitoring; cryogenic products, material handling systems, steelmaking equipment, pulp and paper machinery, agricultural machinery, life associated equipment; aero engines; rocket, space utilization, defense, and traffic control systems; and communication, electronic, electric measuring, information processing machines, and other instruments and equipment. In addition, the company sells and rents real estate. The company was formerly known as Ishikawajima-Harima Heavy Industries Co., Ltd and changed its name to IHI Corporation in 2007. IHI Corporation was founded in 1853 and is headquartered in Tokyo, Japan.

About Allison Transmission

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells fully automatic transmissions for medium- and heavy-duty commercial vehicles and medium- and heavy-tactical U.S. defense vehicles, and electrified propulsion systems worldwide. It provides commercial-duty on-highway, off-highway and defense fully automatic transmissions, and electric hybrid and fully electric systems. The company offers transmissions for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school and transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. It provides its transmissions and electric propulsion solutions under the Allison Transmission brand name; and remanufactured transmissions under the ReTran brand name. The company also sells branded replacement parts, support equipment, aluminum die cast components, and other products necessary to service the installed base of vehicles utilizing its solutions, as well as defense kits, engineering services, and extended transmission coverage services to various original equipment manufacturers, distributors, and the U.S. government. It serves customers through an independent network of approximately 1,600 independent distributor and dealer locations. The company was formerly known as Clutch Holdings, Inc. Allison Transmission Holdings, Inc. was founded in 1915 and is headquartered in Indianapolis, Indiana.